As Iran continues to unleash strikes throughout the Middle East in retaliation for continued airstrikes by the US and Israel, oil and gas prices have skyrocketed. After QatarEnergy, one of the largest exporters in the world, suspended production due to “military attacks” on its facilities, natural gas prices jumped by almost 50% on Monday. Following the weekend attacks on at least three ships near the Strait of Hormuz, Brent crude, the world’s benchmark for oil prices, surged 10% to beyond $82 per barrel on Monday.
About 20% of the world’s oil and gas are transported through the vital waterway in the country’s south, and Iran issued a warning to ships not to sail through it. The two main US stock market indexes began the day lower, but by the middle of the trading day, the Nasdaq and S&P 500 had recovered their losses and were slightly higher. The owner of British Airways had the largest decline in the index after the disruption to Middle Eastern airspace, and the FTSE 100 share index in London closed down 1.2%.
Concerns that a persistent increase in energy prices could feed inflation, which could result in fewer interest rate reduction by central banks, caused banks including Barclays, Standard Chartered, and HSBC to have their share values decline. The largest increases on the FTSE 100 were companies in the oil and defense sectors. Germany’s Dax continued its previous drops to trade 2.6% lower, while France’s CAC-40 index closed down 2.2%.
The state-owned company QatarEnergy announced that it has halted LNG production after the Ministry of Defense (MoD) of the nation claimed that a drone fired from Iran had targeted a facility in Ras Laffan Industrial City. A drone targeted a water tank at a power facility in Mesaieed, south of the capital Doha, according to Qatar’s Ministry of Defense. Aramco temporarily closed its large oil refinery at Ras Tanura on the coast in neighboring Saudi Arabia after it was struck by a drone. With analysts cautioning that a protracted battle could drive oil prices even higher, international shipping has all but stopped at the entrance to the Strait of Hormuz.
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